Volkswagen to fire three executives as emissions scandal deepens

Volkswagen will fire three top executives on Friday, a senior source said, as the German carmaker tries to recover from a scandal over its rigging of U.S. vehicle emissions tests.

One day after chief executive Martin Winterkorn quit, the source said the head of the company's U.S. operations and top engineers at premium VW brands Audi and Porsche would be dismissed, regardless of whether they knew about the cheating.

But the worst scandal in the company's 78-year history showed no sign of abating as Germany's transport minister said on Thursday it had manipulated tests in Europe as well as the United States.

VW is under pressure to act decisively, with its shares plunging since the crisis broke and German Chancellor Angela Merkel urging it to quickly restore confidence in a company held up for generations as a paragon of German engineering prowess.

Winterkorn stepped down on Wednesday, saying Volkswagen needed a fresh start. The company now looks set to fire executives across its multi-brand group to weed out the source of the manipulations.

"There will be further personnel consequences in the next days and we are calling for those consequences," Volkswagen board member Olaf Lies told the Bavarian broadcasting network.

The research and development chiefs of Audi and Porsche, Ulrich Hackenberg and Wolfgang Hatz, will be removed by the supervisory board, as will VW's top executive in the United States, Michael Horn, the senior source told Reuters.

Hackenberg and Hatz had both held senior posts at VW in development, including of engines, before they switched to Audi and Porsche. They are among VW's highest-ranking engineers.

Horn acknowledged this week that the company had "totally screwed up" by deceiving U.S. regulators about how much its diesel cars pollute.

The supervisory board is also due to announce a successor as chief executive.

Photos of former VW CEO Martin Winterkorn:

7PHOTOS

Martin Winterkorn, former Volkswagen CEO

See Gallery

Volkswagen to fire three executives as emissions scandal deepens

WOLFSBURG, GERMANY - MARCH 13, 2014: In this file photo Volkswagen CEO Martin Winterkorn attends the company's annual press conference on March 13, 2014 in Wolfsburg, Germany. Winterkorn announced on September 22, 2015 that he will not step down following the diesel emissions scandal that Volkswagen has admitted could affect up to 11 million VW cars. (Photo by Sean Gallup/Getty Images)

WOLFSBURG, GERMANY - SEPTEMBER 23: Rain clouds are seen over a Volkswagen symbol at the main entrance gate at Volkswagen production plant on September 23, 2015 in Wolfsburg, Germany. Volkswagen CEO Martin Winterkorn and other members of the supervisory board are believed to be meeting inside the headquarters to discuss the Volkswagen Diesel emission scandal, which affects 11 million vehicles worldwide. (Photo by Alexander Koerner/Getty Images)

SONNEFELD, GERMANY - SEPTEMBER 23: The dual exhaust pipes on a Volkswagen turbodiesel passenger car are visible below the vehicle on September 23, 2015 in Sonnefeld, Germany. The inner circle of the Volkswagen governing board is meeting today to discuss the current diesel emissions scandal that has already caused the company's stock market value to plummet approximately 30% since Monday. Volkswagen CEO Martin Winterkorn has admitted the company installed software into 11 million of its diesel-powered passenger cars that manipulates emissions results under testing circumstances. The U.S. Environmental Protection Agency (EPA) first announced the discovery of the software and is planning to fine Volkswagen up to USD 18 billion.(Photo by Sean Gallup/Getty Images)

CEO of Volkswagen AG Martin Winterkorn (R) and CEO of Porsche AG Matthias Mueller (C) are seen speaking with German Chancellor Angela Merkel (L) at the 66th IAA auto show in Frankfurt am Main, western Germany, on September 17, 2015. Angela Merkel called for 'full transparency' from VW in the company's cheating scandal. German auto giant Volkswagen revealed on September 22, 2015 that 11 million diesel cars worldwide are equipped with devices that can cheat pollution tests, a dramatic expansion of a scandal that immediately sent its shares plummeting by another 20 percent. AFP PHOTO / ODD ANDERSEN (Photo credit should read ODD ANDERSEN/AFP/Getty Images)

BERLIN, GERMANY - MAY 30: Chairman of the board of directors of Volkswagen Martin Winterkorn lifts the trophy next to Klaus Mohrs (R), mayor of the city Wolfsburg, during the VfL Wolfsburg Champions party after winning the German DFB Cup Final at Spindler & Klatt on May 30, 2015 in Berlin, Germany. (Photo by Martin Rose/Bongarts/Getty Images)

CEO of German car maker Volkswagen (VW), Martin Winterkorn, attends the shareholders' annual general meeting of VW AG in Hanover, central Germany, on May 5, 2015. German auto giant Volkswagen held its first ordinary shareholders' annual general meeting since a bitter power struggle at the top of the company led to the resignation of VW patriarch Ferdinand Piech as supervisory board head. AFP PHOTO / JOHN MACDOUGALL (Photo credit should read JOHN MACDOUGALL/AFP/Getty Images)

Martin Winterkorn, chief executive officer of Volkswagen AG (VW), pauses during the re-opening of a VW showroom in Berlin, Germany, on Tuesday, April 28, 2015. Volkswagen said 11 million vehicles were equipped with diesel engines at the center of a widening scandal over faked pollution controls that will cost the company at least 6.5 billion euros ($7.3 billion). Photographer: Krisztian Bocsi/Bloomberg via Getty Images

Up Next

See Gallery

Discover More Like This

HIDE CAPTION

SHOW CAPTION

of

SEE ALL

BACK TO SLIDE

The chief executives of Porsche, Matthias Mueller, and Audi, Rupert Stadler, as well as VW brand, Herbert Diess, are seen as the front-runners, three people familiar with the matter told Reuters on Wednesday, with Mueller viewed as the favorite.

VW said on Tuesday about 11 million of its cars worldwide were fitted with the software that was found to be cheating emissions in the United States. The U.S. Environmental Protection Agency has said Volkswagen could face penalties of up to $18 billion.

In a potential setback to the company's attempts to move on, German Transport Minister Alexander Dobrindt suggested tests had also been rigged in Europe.

"We have been informed that also in Europe, vehicles with 1.6 and 2.0 liter diesel engines are affected by the manipulations that are being talked about," he told reporters, though he did not say how many vehicles were affected.

"DEFEAT DEVICES"

Shares in the German company have sunk by as much as 40 percent since U.S. regulators said on Friday it had admitted to rigging emissions tests on hundreds of thousands of diesel cars.

Regulators in Europe and Asia had already said they would investigate Volkswagen and other carmakers, and Volkswagen also faces criminal inquiries and lawsuits from cheated customers.

Italian prosecutors have opened a preliminary probe, a judicial source said, and the executive European Commission urged all member states on Thursday to investigate how many cars use illegal "defeat" devices in emissions tests.

The scandal has sent shockwaves through the car market, with manufacturers fearing a drop in demand for diesel cars and tougher regulations and customers worrying about the performance and re-sale value of their cars.

Dobrindt said Europe would agree new emissions tests in coming months that should take place on roads, rather than in laboratories, and that random checks would be made on all manufacturers.

So far, no other carmaker has been found to have used the same so-called "defeat devices" employed by Volkswagen. German rival BMW said on Thursday it had not manipulated emissions tests, after a magazine reported some of its diesel cars were found to exceed emissions standards.

DIESEL CAR DRIVERS WORRIED

Friday's board meeting had originally been due to extend the contract of Winterkorn and set out a new management structure.